‘There is a demand-supply mismatch of equipment’

BAUER Equipment India Pvt. Ltd is a part of BAUER Maschinen GmbH, Germany, which designs and manufactures rotary drilling rigs, diaphragm wall equipment and related tools. It has been operating in the market as an independent entity within the BAUER Group since 2001. Jagpal Singh Lotay spoke to Sandeep Menezes on various aspects of the construction equipment sector

How is response at bC India 2013?
It has been reasonably good because a lot of serious customers walked in and we expect the relationship to flourish in times to come. Because of the market conditions they may not buy immediately but they will remain serious prospects for the future.

The construction equipment market was largely flat last year. How do you foresee the sector moving in near future?
In the foundation equipment segment, we don’t expect a huge change because there is a demand-supply mismatch of equipment. There are too many types of equipment which are lying idle. We don’t see much of a change happening this year also. We expect de-growth this year with market having slumped down to nearly 15 or 20 per cent of last year.

Next year, we don’t see a huge change because there would be rejigging and restructuring happening in the market. Market stabilisation should happen along with emergence of specialist foundation equipment companies. This will lead to quality of work improving and a shakeout where marginal players will get out of this business.

But we expect substantial growth in the subsequent years.

Inadequately trained equipment operators and technicians is a critical issue.
Trained manpower has always been a huge challenge. BAUER has been focused on safety and training. Since India is still at the nascent stage, people still see this as an expense rather than an investment. This scenario will change. We have different types of arrangements with customers for suitable training of operators and technicians. This will definitely lead to minimisation of accidents. Safety has always been a prime concern at BAUER. When we deliver equipment, it is mandatory that we train the operators.

Raw material costs are rising continuously and there is stiff competition resulting in lowering of equipment pricing.
We are looking at the market very closely and also at indigenisation of product items and aggregates. But again, it all depends on market sentiment. We are seriously looking at indigenisation of aggregates so that the prices come down.

Right now anything that gets imported has 26 to 27 per cent import duty which leads to cost inflation. We are trying to work it out for the benefit of customers so that we can source the maximum aggregates locally without compromising on quality.

In India, most customers only look at initial pricing while ignoring lifecycle cost.
I would disagree with you. There are customers who look at lifecycle costs also. India is a huge market and there are all types of customers. There are customers who look at only initial pricing but there also exists customers who look at long-term relationships and long-term product utilisation. We have got products which are working in the market since the last 25 years. For example, we sold our first equipment to L&T in 1994 which is still working in Mumbai.

Therefore, customers have realised about longevity of products. BAUER has always focused on building relationships. We don’t only talk about selling equipments, we get involved with customers right from tendering stage of projects. We speak to customers about projects and ways in which to execute projects and the right solutions.

We go beyond selling equipment; therefore, on pricing, we are on the higher side. We not only provide equipment to customers, we provide complete solutions.

Critics claim global equipment manufacturers bring stripped-down versions of their equipment to India.
We are serious about the Indian market and studied it deeply. Therefore, we have come up with specialised equipment which we call value line. We have two product lines: premium line and value line. The premium line is primarily for the developed countries and value line has been developed looking at the Indian specific market. No compromise has been made on safety, productivity and efficiency of equipment.

What are your budget expectations?
We expect the government to soften interest rates. They should invest in projects while having a clear strategy and focus on infrastructure projects.

Right now GST is not affecting our industry in a big way because a lot of equipment is imported. Once the market matures a bit and people start manufacturing locally, then GST is something that has been widely accepted globally and should come into force in India also.